The introduction of Pensions Dashboards could see losses due to ‘poorly informed’ transfers into higher charging pensions soar beyond £2 billion before the end of the decade, leading workplace provider People’s Partnership1 has warned today.
The provider of The People’s Pension, which serves more than 6.8 million members, has shared new data from its Pension Transfer Outcomes Index2 showing losses from savers transferring into higher charging pensions will continue to rise. This trend is expected to increase once Pensions Dashboards, designed to give people an overview of all their pensions in one place, go live for the first time in two years’ time, on 31 October 2026.
New research3 commissioned by People’s Partnership has found that over 4 in 10 pension savers (42%) say they would be likely to use a pensions dashboard to move their pension from one company to another. An increase in transfers will lead to an increase in poorly informed pension transfer decisions, given the difficulties people face comparing their options, leaving many savers vulnerable to making choices that could negatively impact their financial future.
The profit for people organisation is calling for the incoming FCA Value for Money metrics to be clearly displayed on pensions dashboards. This will allow people to compare their pensions based on the information that matters most, such as the fees they are paying. This is supported by its research, which found that a simple way to compare the overall value for money provided by each of their pensions is one of the features over 4 in 10 (43%) pension savers most want to see on a dashboard, after a projection for their pension pot in retirement for over half of savers (53%).
The YouGov research also reveals that a fifth of pension savers (21%) have lost track of a pension. Half (50%) said they are likely to use a pensions dashboard to find any of their missing pensions, meaning millions could now take action on pensions previously lost to them, which could leave them thousands of pounds worse off in retirement.
Patrick Heath-Lay, CEO, People’s Partnership, said: “Pensions dashboards are a ticking timebomb for further detrimental pension transfers. Our research shows that many people find it difficult to navigate and compare their pension options due to overly complex or inconsistent information, leaving them extremely vulnerable in these types of transactions. With the arrival of dashboards, we anticipate this confusion will only intensify, making it even harder for savers to make informed decisions.
“We are very worried that dashboards will increase poorly informed decisions which lead to big losses over time. The risk is particularly severe if providers use dashboards as an opportunity to aggressively market the pensions they offer to consumers, without any way to easily compare options as we know that people don’t shop around for a pension transfer.
“It is vital that simple, easy-to-understand comparisons of value for money are on commercial pensions dashboards when they begin to go live in two years’ time, so people don’t fall victim to offers that seem better than they are and make decisions which they later regret. A simple consumer-facing value for money framework should apply to all pensions, not just relatively low-charging workplace options. Urgent action is needed to stop people from losing thousands of pounds and having to work for years longer before they can retire.”
People’s Partnership has previously revealed5 that nearly three quarters (72%) of people who had recently transferred a pension didn’t know exactly what the fees were for their new or old pension, and one in 10 (11%) didn’t think their new pension had any fees.
ENDS
Notes for editors:
1. People’s Partnership provides The People’s Pension, one of the largest independent master trusts in the UK, serving more than six million pension savers across the UK and manages £30bn in assets. As a business without shareholders, it reinvests its profits with the aim to help customers and achieve better financial outcomes for everyone.
2.Transfer Outcomes Index | People’s Partnership. The Index is based on movements where people switch from a lower charging workplace pension, which are subject to a charge cap, to higher charging, uncapped, retail schemes, for their lifetime pension saving journey. New analysis of People’s Partnership’s Pension Transfer Outcomes Index, which was launched in the summer, shows that pension transfer losses are projected to rise from £1.2bn in 2023 to £1.7bn by 2027, and by the end of the decade, they are expected to surpass £2bn2.
3. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2074 adults. Fieldwork was undertaken between 13th – 16th September 2024. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).The research was conducted in November and December 2023 by People’s Partnership. They surveyed 1,000 people who had consolidated their defined contribution (DC) pensions, without the help of a financial adviser, in the last two years.